Capital One 1Q16 Earnings Call Notes

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Richard Fairbank

Rewards competition has intensified a bit but it’s always intense

“So, you ask the question about rewards competition. This is a very competitive space, I think the competition has intensified a bit over the past years, over the past year really issuers are continuing to introduce new offers, upfront bonuses have been gradually increasing over time. I still look at this, as the player its generally rational, intensely competitive and our strategy is design to go right into a marketplace like that.”

Purchase volume continues to be strong

“Okay. Chris, the purchase volume continues to be strong, let’s talk about where we’re seeing it. We’re seeing it across various segments in our business that are growing nicely and obviously the spender and rewards business is growing in our revolver business where we focus on revolvers rather high balance revolvers, we see it in small business.”

Biggest concern is impact of growing competition

“my biggest worry and it kind of gets to your question is the potential impact of growing a competition and actually the growth itself that we see of credit around us. We’ve seen a growth of revolving debt creep up to about 6% recently. That’s pretty high relative to the low and sometimes negative levels since the recession.”

We are watching the growth in the marketplace closely

” the math of the amount of growth that we see in the credit market place is not lost on us. Now it is in the context of a particularly on the card side growth being flattish for a long period of time so we are not overly alarmed by just a surge of growth but we’ll certainly have to keep an eye on this. And we know that in the end the growth, the things that we see in the market place with respect to growth not only affect our growth opportunity they can affect credit with the selection quality of new originations and can impact existing customers who take on more debt from other players.”